BILL NUMBER: AB 1571	CHAPTERED  10/10/99

	CHAPTER   923
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 10, 1999
	PASSED THE SENATE   SEPTEMBER 7, 1999
	AMENDED IN SENATE   SEPTEMBER 2, 1999
	AMENDED IN SENATE   AUGUST 25, 1999
	AMENDED IN SENATE   AUGUST 16, 1999
	AMENDED IN ASSEMBLY   MAY 6, 1999

INTRODUCED BY   Assembly Member Villaraigosa and Senator Brulte

                        FEBRUARY 26, 1999

   An act to add Chapter 9 (commencing with Section 44275) of Part 5
of Division 26 of, the Health and Safety Code, relating to air
pollution, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1571, Villaraigosa.  Carl Moyer Memorial Air Standards
Attainment Program.
   Existing law contains various provisions relative to air pollution
control.
   This bill would create the Carl Moyer Memorial Air Quality
Standards Attainment Program, to be administered by the State Air
Resources Board.  Under the program, the state board would be
authorized to make grants for the purchase of low-emission,
heavy-duty engines for vehicles, equipment, vessels, and locomotives,
as specified.  The bill would permit the administration of the
program to be delegated to air pollution control districts and air
quality management districts.  The bill would require the state
board, not later than January 15, 2000, to prepare a report on the
implementation of the existing diesel emissions incentive program, as
specified, and to submit that report to the Governor and the
Legislature.  The bill would also establish the Carl Moyer Program
Advisory Board, as specified, to review the report, and to prepare
and submit an additional report to the Legislature and the Governor
by March 31, 2000, that may recommend a continuing program, as
provided.
   The bill would create the Carl Moyer Memorial Air Quality
Standards Attainment Trust Fund in the State Treasury to provide
funds to carry out the program.
   The bill would declare that it is to take effect immediately as an
urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  The Legislature hereby finds and declares as follows:
   (a) The state and federal governments have adopted ambient air
quality standards to protect public health, and it is in the public
interest that those standards be achieved as expeditiously as
possible.
   (b) California air quality agencies have adopted a State
Implementation Plan (SIP) for attaining the federal ambient air
quality standards for ozone, which commits the state to substantially
reduce emissions of oxides of nitrogen from mobile sources through
the year 2010.  The critical sources of those emissions to address
are onroad heavy-duty vehicles, offroad nonrecreational equipment and
vehicles, locomotives, diesel marine vessels, stationary
agricultural engines, and other high-emitting diesel engines.
   (c) Plans are also being adopted to meet air quality goals for
inhalable particulates that are also produced by these sources.
   (d) Air quality plans include intermediate milestone objectives
and measures to ensure regular progress in reducing emissions.
Steady progress in reducing oxides of nitrogen and particulate
emissions is essential for meeting air quality goals.
   (e) Emission reductions from onroad heavy-duty vehicles, offroad
nonrecreational equipment and vehicles, locomotives, diesel marine
vessels, and stationary agricultural engines of the magnitude needed
to achieve California SIP commitments and public health goals can
only be achieved with a combination of appropriate state, national,
and international emissions standards, and special programs targeting
California nonattainment areas that must achieve emission reductions
beyond those attainable through new emissions standards and normal
turnover rates of vehicles, equipment, and vessels.
   (f) Several advanced low-NOx technologies have become available
for retrofits, repowers, and new equipment purchases.  These
technologies, however, are limited in applicability and suitability
and do not justify regulatory requirements.  In addition to reducing
NOx emissions, the new technologies may reduce particulate emissions,
providing additional public health benefits.
   (g) Incentive-based programs with voluntary participation to
introduce newer engines, electric motors and drives, and advanced
technologies are the best way to supplement new engine emissions
standards and to reduce emissions from onroad heavy-duty vehicles,
offroad nonrecreational equipment and vehicles, locomotives, diesel
marine vessels, and stationary agricultural engines to the extent
needed to meet air quality goals while still protecting the economic
competitiveness of California's industry and agriculture.
   (h) The Legislature further finds and declares that because of the
extraordinary leadership and dedication shown by the late Dr. Carl
Moyer in conceiving and developing the program embodied in this act,
it is appropriate to recognize his vision and contributions to the
public interest by dedicating the program to his memory.
   (i) The Carl Moyer Memorial Air Quality Standards Attainment
Program created by subdivision (a) of Section 44280 of the Health and
Safety Code and the Carl Moyer Memorial Air Quality Standards
Attainment Trust Fund establish an incentive program that will
substantially reduce emissions of oxides of nitrogen and fine
particulate in California.  It is the intent of the Legislature that
the program be a multiyear program that will be a key component of
California's plan to comply with federal Clean Air Act requirements.

  SEC. 2.  Chapter 9 (commencing with Section 44275) is added to Part
5 of Division 26 of the Health and Safety Code, to read:

      CHAPTER 9.  CARL MOYER MEMORIAL AIR QUALITY STANDARDS
ATTAINMENT PROGRAM
      Article 1.  Definitions

   44275.  As used in this chapter, the following terms have the
following meaning:
   (a) "Advisory board" means the Carl Moyer Program Advisory Board
created by Section 44297.
   (b) "Btu" means British thermal unit.
   (c) "Commission" means the State Energy Resources Conservation and
Development Commission.
   (d) "Cost-effectiveness" means dollars provided to a project
pursuant to subdivision (d) of Section 44283 for each ton of NOx
emission reduction attributed to a project or to the program as a
whole.  In calculating cost-effectiveness, one-time grants of funds
made at the beginning of a project shall be annualized using a time
value of public funds or discount rate determined for each project by
the state board, taking into account the interest rate on bonds,
interest earned by state funds, and other factors as determined
appropriate by the state board.  Cost-effectiveness shall be
calculated by dividing annualized costs by average annual emissions
reduction of NOx in this state.
   (e) "Covered engine" includes any internal combustion engine or
electric motor and drive powering a covered source.
   (f) "Covered source" includes onroad vehicles of 14,000 pounds
GVWR or greater, offroad nonrecreational equipment and vehicles,
locomotives, diesel marine vessels, stationary agricultural engines,
and, as determined by the state board, other high-emitting diesel
engine categories.
   (g) "Covered vehicle" includes any vehicle or piece of equipment
powered by a covered engine.
   (h) "District" means a county air pollution control district or an
air quality management district.
   (i) "Fund" means the Carl Moyer Memorial Air Quality Standards
Attainment Trust Fund created by Section 44299.
   (j) "Mobile Source Air Pollution Reduction Review Committee" means
the Mobile Source Air Pollution Reduction Review Committee created
by Section 44244.
   (k) "Incremental cost" means the cost of the project less a
baseline cost that would otherwise be incurred by the applicant in
the normal course of business.  Incremental costs may include added
lease or fuel costs pursuant to Section 44283 as well as incremental
capital costs.
   (l) "New very low emission vehicle" means a vehicle that qualifies
as a very low emission vehicle when it is a new vehicle, where new
vehicle has the same meaning as defined in Section 430 of the Vehicle
Code, or that is modified with the approval and warranty of the
original equipment manufacturer to qualify as a very low emission
vehicle within 12 months of delivery to an owner for private or
commercial use.
   (m) "NOx" means oxides of nitrogen.
   (n) "Program" means the Carl Moyer Memorial Air Quality Standards
Attainment Program created by subdivision (a) of Section 44280.
   (o) "Repower" means replacing an engine with a different engine.
The term repower, as used in this chapter, generally refers to
replacing an older, uncontrolled engine with a new,
emissions-certified engine, although replacing an older
emissions-certified engine with a newer engine certified to lower
emissions standards may be eligible for funding under this program.
   (p) "Retrofit" means making modifications to the engine and fuel
system such that the retrofitted engine does not have the same
specifications as the original engine.
   (q) "Very low emission vehicle" means a vehicle with emissions
significantly lower than otherwise applicable baseline emission
standards or uncontrolled emission levels pursuant to Section 44282.


      Article 2.  Program Introduction

   44280.  (a) There is hereby created the Carl Moyer Memorial Air
Quality Standards Attainment Program.  The program shall be
administered by the state board in accordance with this chapter.  The
administration of the program may be delegated to the districts.
   (b) The program shall provide grants to offset the incremental
cost of projects that reduce emissions of NOx from covered sources in
California.  Eligibility for grant awards shall be determined by the
state board, in consultation with the districts, in accordance with
this chapter.
   (c) The program shall also provide funding for a fueling
infrastructure demonstration program and for technology development
efforts that are expected to result in commercially available
technologies in the near-term that would improve the ability of the
program to achieve its goals.  The infrastructure demonstration and
technology development portions of the program shall be managed by
the commission, in consultation with the state board.

      Article 3.  Eligible Projects and Applicants

   44281.  (a) Eligible projects are any of the following:
   (1) Purchase of new very low or zero-emission covered vehicles or
covered engines.
   (2) Emission-reducing retrofit of covered engines, or replacement
of old engines powering covered sources with newer engines certified
to more stringent emissions standards than the engine being replaced,
or with electric motors or drives.
   (3) Purchase and use of emission-reducing add-on equipment for
covered vehicles.
   (4) Development and demonstration of practical, low-emission
retrofit technologies, repower options, and advanced technologies for
covered engines and vehicles with very low emissions of oxides of
nitrogen.
   (b) No new purchase, retrofit, repower, or add-on equipment shall
be funded under this chapter if it is required by any local, state,
or federal statute, rule, regulation, memoranda of agreement or
understanding, or other legally binding document, except that an
otherwise qualified project may be funded even if the State
Implementation Plan assumes that the change in equipment, vehicles,
or operations will occur, if the change is not required by a statute,
regulation, or other legally binding document in effect as of the
date the grant is awarded.  No project funded by the program shall be
used for credit under any state or federal emissions averaging,
banking, or trading program.  No emission reduction generated by the
program shall be used as marketable emission reduction credits or to
offset any emission reduction obligation of any entity.  Projects
involving new engines that would otherwise generate marketable
credits under state or federal averaging, banking, and trading
programs shall include transfer of credits to the engine end user and
retirement of those credits toward reducing air emissions in order
to qualify for funding under the program.  A purchase of a
low-emission vehicle or of equipment pursuant to a corporate or a
controlling board's policy, but not otherwise required by law, shall
generate surplus emissions reductions and may be funded by the
program.
   (c) The program may also provide funding toward installation of
fueling or electrification infrastructure as provided in Section
44284.
   (d) Eligible applicants may be any individual, company, or public
agency that owns one or more covered vehicles that operate primarily
within California or otherwise contribute substantially to the NOx
emissions inventory in California.
   (e) It is the intent of the Legislature that all emission
reductions generated by this chapter shall contribute to public
health by reducing, for the life of the vehicle being funded, the
total amount of emissions in California.

      Article 4.  General Eligibility Criteria

   44282.  The following criteria apply to all projects to be funded
through the program except for projects funded through the Advanced
Technology Account and the Infrastructure Demonstration Program:
   (a) Except for projects involving marine vessels, 75 percent or
more of vehicle miles traveled or hours of operation shall be
projected to be in California for at least five years following the
grant award.  Projects involving marine vessels and engines shall be
limited to those that spend enough time operating in California air
basins over the lifetime of the project to meet the
cost-effectiveness criteria based on NOx reductions in California, as
provided in Section 44283.
   (b) To be eligible, projects shall meet cost-effectiveness per ton
of NOx reduced requirements of Section 44283.
   (c) To be eligible, retrofits, repowers, and installation of
add-on equipment for covered vehicles shall be performed, or new
covered vehicles delivered to the end user, on or after the date the
program is implemented.
   (d) Retrofit technologies, new engines, and new vehicles shall be
certified for sale or under experimental permit for operation in
California.
   (e) Repower projects that replace older, uncontrolled engines with
new, emissions-certified engines or that replace emissions-certified
engines with new engines certified to a more stringent NOx emissions
standard are approvable subject to the other applicable selection
criteria.  The state board shall determine appropriate baseline
emission levels for the uncontrolled engines being replaced.
   (f) Retrofit and add-on equipment projects shall document a NOx
emission reduction of at least 25 percent and no increase in
particulate emissions compared to the applicable baseline emissions
accepted by the state board for that engine year and application.
The state board shall determine appropriate baseline emission levels.
  Acceptable documentation shall be defined by the state board.
After study of available emission reduction technologies and after
public notice and comment, the state board may revise the minimum
percentage NOx reduction criterion for retrofits and add-on equipment
provided for in this section to improve the ability of the program
to achieve its goals.
   (g) (1) For projects involving the purchase of new very low or
zero-emission vehicles, engines shall be certified to an optional low
NOx emissions standard established by the state board, except as
provided for in paragraph (2).
   (2) For projects involving the purchase of new very low or
zero-emission covered vehicles for which no optional low-NOx emission
standards are available, documentation shall be provided showing
that the low or zero-emission engine emits not more than 70 percent
of the NOx or NOx plus hydrocarbon emissions of a new engine
certified to the applicable baseline NOx or NOx plus hydrocarbon
emission standard for that engine and meets applicable particulate
standards.  The state board shall specify the documentation required.
  If no baseline emission standard exists for new vehicles in a
particular category, the state board shall determine an appropriate
baseline emission level for comparison.

      Article 5.  Cost-Effectiveness Criteria

   44283.  (a) Grants shall not be made for projects with a
cost-effectiveness, calculated in accordance with this section, of
more than twelve thousand dollars ($12,000) per ton of NOx reduced in
California.
   (b) Only NOx reductions occurring in this state shall be included
in the cost-effectiveness determination.  The extent to which
emissions generated at sea contribute to air quality in California
nonattainment areas shall be incorporated into these methodologies
based on a reasonable assessment of currently available information
and modeling assumptions.
   (c) The state board shall develop protocols for calculating the
surplus NOx reductions in California from representative project
types over the life of the project.
   (d) The cost of the NOx reduction is the amount of the grant from
the program, including matching funds provided pursuant to
subdivision (e) of Section 44287, plus any other state funds, or
funds under the district's budget authority or fiduciary control,
provided toward the project.  The state board shall establish
reasonable methodologies for evaluating project cost-effectiveness,
consistent with the definition contained in subdivision (c) of
Section 44275, and with accepted methods, taking into account a fair
and reasonable discount rate or time value of public funds.
   (e) A grant shall not be made that, net of taxes, provides the
applicant with funds in excess of the incremental cost of the
project.  Incremental lease costs may be capitalized according to
guidelines adopted by the state board so that these incremental costs
may be offset by a one-time grant award.
   (f) Funds under a district's budget authority or fiduciary control
may be used to pay for the incremental cost of liquid or gaseous
fuel, other than standard gasoline or diesel, which is integral to a
NOx reducing technology that is part of a project receiving grant
funding under the program.  The fuel shall be approved for sale by
the state board.  The incremental fuel cost over the expected
lifetime of the vehicle may be offset by the  district if the project
as a whole, including the incremental fuel cost, meets all of the
requirements of this chapter, including the maximum allowed
cost-effectiveness.  The state board shall develop an appropriate
methodology for converting incremental fuel costs over the vehicle
lifetime into an initial cost for the purposes of determining project
cost-effectiveness.  Incremental fuel costs may not be included in
project costs for fuels dispensed from any facility that was funded,
in whole or in part, from the fund.
   (g) For purposes of determining any grant amount pursuant to this
chapter, the incremental cost of any new purchase, retrofit, repower,
or add-on equipment shall be reduced by the value of any current
financial incentive that directly reduces the project price,
including any tax credits or deductions, grants, or other public
financial assistance.  Project proponents applying for funding shall
be required to state in their application any other public financial
assistance to the project.
   (h) For projects that would repower offroad equipment by replacing
uncontrolled diesel engines with new, certified diesel engines, the
state board may establish maximum grant award amounts per repower.  A
repower project shall also be subject to the incremental cost
maximum pursuant to subdivision (e).
   (i) After study of available emission reduction technologies and
costs and after public notice and comment, the state board may reduce
the values of the maximum grant award criteria stated in this
section to improve the ability of the program to achieve its goals.
Every  year the state board shall adjust the maximum
cost-effectiveness amount established in subdivision (a) and any
per-project maximum set by the state board pursuant to subdivision
(h) to account for inflation.

      Article 6.  Infrastructure Demonstration Project

   44284.  (a) In order to provide sufficient support for
low-emission vehicle projects at the start of the program, the
commission shall administer a demonstration project that provides
limited funds for fueling infrastructure.  Expenditures from the fund
for this demonstration program shall not exceed two million five
hundred thousand dollars ($2,500,000).  In addition to providing
necessary financial assistance to a limited number of infrastructure
projects, the purpose of the infrastructure demonstration program is
to assess whether funding for infrastructure is an appropriate and
cost-effective use of public funds.
   (b) The commission shall solicit applications for a balanced mix
of demonstration projects involving fueling and electrification
infrastructure that is linked to covered vehicle projects and that is
consistent with program goals.  The commission, in consultation with
participating districts, shall make every effort to coordinate
infrastructure projects with covered vehicle projects representing a
broad variety of fuels, technologies, and applications as appropriate
and consistent with this chapter.  Infrastructure projects that
begin to dispense qualifying fuel on or after the date the program is
implemented are eligible for funding under the program.  The
commission may also subvene infrastructure funds to districts to
solicit applications and to  expend the funds in accordance with this
section.  The commission shall have  oversight and reporting
responsibility for any funds that are subvened pursuant to this
subdivision.
   (c) Any fueling infrastructure funded under the program shall be
approved for funding by both the commission and the applicable
district.  The commission, in consultation with the districts, shall
develop guidelines and criteria for infrastructure projects to be
funded under the program.
   (d) The purchase and installation of equipment at a site that is
designed primarily to dispense qualifying fuel is eligible for
funding under the program.  "Qualifying fuel" includes any liquid or
gaseous fuel, other than standard gasoline or diesel, which is
ultimately dispensed into covered vehicles that provide NOx
reductions in California, and which were introduced into operation in
California on or after the date the program is implemented.
   (e) Infrastructure projects to dispense qualifying fuel are
eligible for funding from the Infrastructure Demonstration Program at
a rate of seven dollars ($7) in one-time funding per million Btus of
qualifying fuel to be dispensed annually.  Projects that cannot
demonstrate sufficient annual fuel throughput to qualify for a one
hundred thousand dollar ($100,000) award, that is, over 14,280
million Btus per year, are not eligible for funding.  Projects that
can demonstrate an annual throughput of more than 14,280 million Btus
per year, however, may request funding in amounts less than one
hundred thousand dollars ($100,000).  Private access facilities are
eligible for a maximum award of up to four hundred thousand dollars
($400,000).  Public access or limited public access facilities are
eligible for a maximum award of up to six hundred thousand dollars
($600,000).  Cofunding may be required to receive the applicable
award amount.  Infrastructure project awards from the fund, net of
taxes, shall not exceed the total cost of the infrastructure project
less any other applicable grants or tax credits.
   (f) Infrastructure projects to dispense qualifying fuel shall meet
all of the following criteria:
   (1) Provide documentation, signed by owners of vehicles that will
use the fuel, to demonstrate that an approvable amount of qualifying
fuel is expected to be dispensed over a period of at least five
years.
   (2) Be designed to meet current industry standards and codes and
any applicable regulations.
   (3) If the owner of the fuel storage and dispensing equipment will
be fueling vehicles the owner does not own, the owner shall provide
one or more statements, signed by the proposed fueling equipment
owner and by the owners of those vehicles that are referenced in the
demonstration of adequate fuel throughput pursuant to subdivision
(e), that mutually satisfactory arrangements regarding fuel price
have been made.  If the owner and operator of the fueling equipment
will use the equipment exclusively to fuel his or her own vehicles,
no documentation regarding fuel pricing arrangements is required.
   (g) Infrastructure projects to dispense electricity to covered
vehicles shall be eligible for funding from the Infrastructure
Demonstration Program at the rate of a minimum of four thousand
dollars ($4,000), up to a maximum of ten thousand dollars ($10,000)
per charger infrastructure charge port including installation for
each qualifying charger.  A "qualifying charger" is any charger that
dispenses 4,000 kWh or more of energy per year, through each of one
or more charging ports, into one or more covered vehicles that
provide NOx reductions in California.  Awards shall be based on a
sliding scale of four thousand dollars ($4,000) to fourteen thousand
dollars ($14,000) per charger port for qualifying chargers that
dispense between 4,000 kWh and 15,000 kWh of electricity per port.
In order for the project to be eligible for funding, documentation
shall be provided, signed by owners of the vehicles that will use the
charger, to demonstrate that the claimed kilowatt hours of
electricity are expected to be dispensed per year for a period of at
least five years.  Funding shall be limited to a maximum award of two
hundred thousand dollars ($200,000) per business  per location.
Infrastructure project awards from the fund, net of taxes, shall not
exceed the total cost of the infrastructure project less any other
applicable grants or tax credits.
   (h) The commission, in consultation with the state board and the
districts, shall develop a simple, standardized application package
for a project to be funded from the Infrastructure Demonstration
Program.  In addition to the application form, an application package
shall include a brief description of the program, the projects that
are eligible for the funding that is available, the selection
criteria and evaluation process, the documentation that is required,
and who to contact for more information, as well as an example of the
contract that an applicant will be required to execute before
receiving a grant award.  The application form shall require as much
information as the commission determines is necessary to properly
evaluate each project, but shall otherwise minimize the information
required.  An applicant shall not be required to calculate tons of
emissions reduced or cost-effectiveness as part of the application.
Application packages shall be finalized and published as soon as
practicable.
   (i) The commission shall make staff or technical support
contractors available on an as-needed basis within available
budgetary resources to assist project proponents to address issues
common to infrastructure projects eligible for funding.  Those issues
may involve permitting and safety requirements.
   (j) As part of the annual program reports required pursuant to
Section 44295, the commission shall report on the use of
Infrastructure Demonstration Program funds.  The commission shall
report on facilities funded, how those facilities are supporting
covered vehicle projects, fuel or electricity dispensed from each
facility, and associated emissions reductions and cost-effectiveness.
  The commission shall calculate a total cost-effectiveness of NOx
reductions from the vehicles that fuel at facilities funded from the
Infrastructure Demonstration Program.  This total cost-effectiveness
shall include program funding provided to vehicles as well as funding
provided from the Infrastructure Demonstration Program.

      Article 7.  Advanced Technology Development

   44285.  (a) From time to time, the commission shall issue specific
requests for proposals (RFPs) or program opportunity notices (PONs)
for technology proposals to be funded from the Advanced Technology
Account.  The first issuance of RFPs or PONs shall be no later than
January 31, 2000.  It is the intent of the Legislature that the
technology grants be used to support development of emission-reducing
technologies that could be used for projects eligible for funding
pursuant to this chapter.  It is also the intent of the Legislature
that the technology grants be directed to a balanced mix of retrofit
and add-on technologies to reduce emissions from the existing stock
of                                             targeted vehicles, as
well as to advanced technologies for new engines and vehicles that
produce very low or zero-NOx emissions.  The commission, in
consultation with the state board, may also consider funding
technology projects that would allow qualifying fuels, as defined in
subdivision (d) of Section 44284, to be produced from California
energy resources, with preference given to projects involving
otherwise unusable California energy resources, at prices lower than
prices otherwise available and low enough to make projects that would
qualify for funding under the program economically attractive to
local businesses.  Not more than 20 percent of Advanced Technology
Account funds may be directed to those qualifying fuel projects.
Advanced technologies and any retrofit or add-on projects that
provide multiple benefits by reducing emissions of particulates and
other air pollutants should be given special consideration by the
commission in soliciting proposals and determining how to allocate
funds.  At least 50 percent of the funds available in the Advanced
Technology Account shall be directed toward technologies that provide
multiple benefits.
   (b) Proposals involving technologies that allow onroad covered
vehicles to replace with electric power the power normally supplied
by the vehicles' internal combustion engine while the vehicle is
parked shall be eligible for funding from the Advanced Technology
Account if they meet all applicable criteria under this section.
   (c) Technologies proposed for technology grants shall show clear
and compelling evidence that the technology being funded has a strong
commercialization plan and organization, is likely to be offered for
commercial sale in California within five years of the application
for funding, and that, once commercial, the technology will present
opportunities for projects otherwise eligible for funding pursuant to
this chapter.  The commission shall specifically consider the
projected NOx reducing potential and cost-effectiveness of the
commercialized technology, the potential for the technology to
contribute in a significant way to air quality goals, and the
strength of the commercialization plan.
   (d) The commission may require cost sharing for technology
projects, but shall not require repayment of funds granted.
   (e) Proposals for projects involving either publicly owned or
privately owned vehicles or vessels shall be eligible for technology
awards.
   (f) In developing RFPs and PONs and in evaluating proposals for
funding, the commission shall consider that the primary objective of
technology grants is to advance toward commercialization technologies
that would support projects to be funded under the program.

      Article 8.  Program Administration:  General

   44286.  (a) The responsibilities of the state board include
management of program funds and program oversight.  The state board
is responsible for producing guidelines, protocols, and criteria for
covered vehicle projects and developing methodologies for evaluating
project cost-effectiveness in accordance with this chapter.  The
state board shall have primary responsibility for the reporting
aspects of the program.
   (b) The responsibilities of a district include local
administration of project funds, monitoring funded projects, and
reporting results to the state board, in accordance with this
chapter.  Any project funds awarded to a successful applicant shall
be disbursed by the district.
   (c) Relative to the allocation of funds in the south coast
district, for purposes of this program, Mobile Source Air Pollution
Reduction Review Committee funds shall only be used as matching funds
upon approval, by minute action, of the Mobile Source Air Pollution
Reduction Review Committee.
   (d) The state board may reserve up to 10 percent of the program
funds available each year to directly fund  any project that is
multidistrict in nature.  A project that is multidistrict in nature
shall be funded by the state board in coordination with the
appropriate districts.  The state board shall coordinate outreach
efforts with a participating district to ensure that any parallel
availability of a district grant and a grant from the state board is
clear to an eligible applicant.  Reserved funds not committed to a
project funded directly by the state board by the end of the fiscal
year shall be made available to the districts in the following year.

   (e) The commission, in consultation with the state board, shall
manage the Advanced Technology Account and the Infrastructure
Demonstration Program in accordance with this chapter.
   (f) The state board shall work closely with the commission and the
districts for the duration of this program to maximize the ability
of the program to achieve its goals.
   (g) The state board and the districts shall take all appropriate
and necessary actions to ensure that emissions reductions achieved
through the program are credited by the United States Environmental
Protection Agency to the appropriate emission reduction objectives in
the State Implementation Plan.
   44287.  (a) The state board shall establish grant criteria and
guidelines consistent with this chapter for covered vehicle projects
as soon as practicable, but not later than January 1, 2000.  The
adoption of guidelines is exempt from the rulemaking provisions of
the Administrative Procedure Act, Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code.  The state board shall solicit input and comment from the
districts during the development of the criteria and guidelines and
shall make every effort to develop criteria and guidelines that are
compatible with existing district programs that are also consistent
with this chapter.  Guidelines shall include protocols to calculate
project cost-effectiveness.  The grant criteria and guidelines shall
include safeguards to ensure that the project generates surplus
emissions reductions.  Guidelines shall enable and encourage
districts to cofund projects that provide emissions reductions in
more than one district.  The state board shall make draft criteria
and guidelines available to the public 45 days before final adoption,
and shall hold at least one public meeting to consider public
comments before final adoption.
   (b) The state board, in consultation with the participating
districts, may propose revisions to the criteria and guidelines
established pursuant to subdivision (a) as necessary to improve the
ability of the program to achieve its goals.  A proposed revision
shall be made available to the public 45 days before final adoption
of the revision and the state board shall hold at least one public
meeting to consider public comments before final adoption of the
revision.
   (c) The state board shall reserve funds for, and disburse funds
to, districts from the fund for administration pursuant to this
section and Section 44299.1.
   (d) The state board shall develop guidelines for a district to
follow in applying for the reservation of funds, in accordance with
this chapter.  It is the intent of the Legislature that district
administration of any reserved funds be in accordance with the
project selection criteria specified in Sections 44281, 44282, and
44283 and all other provisions of this chapter.  The guidelines shall
be established and published by the state board as soon as
practicable, but not later than January 1, 2000.
   (e) Funds shall be reserved by the state board for administration
by a district that adopts an eligible program pursuant to this
chapter and offers matching funds at a ratio of one dollar ($1) of
matching funds committed by the district or the Mobile Source Air
Pollution Reduction Review Committee for every two dollars ($2)
committed from the fund.  Funds available to the Mobile Source Air
Pollution Reduction Review Committee may be counted as matching funds
for projects in the South Coast Air Basin only if the committee
approves the use of these funds for matching purposes.  Matching
funds may be any funds under the district's budget authority that are
committed to be expended in accordance with the program.  Funds
committed by a port authority or a local government, in cooperation
with a district, to be expended in accordance with the program may
also be counted as district matching funds.  Matching funds provided
by a port authority or a local government may not exceed 30 percent
of the total required matching funds in any district that applies for
more than three hundred thousand dollars ($300,000) of the state
board funds.  Only a district, or a port authority or a local
government teamed with a district, may provide matching funds.
   (f) Notwithstanding subdivision (e), a district need not provide
matching funds for state board funds allocated to the district for
program outreach activities pursuant to paragraph (4) of subdivision
(a) of Section 44299.1.
   (g) A district may include within its matching funds a reasonable
estimate of direct or in-kind costs for assistance in providing
program outreach and application evaluation.  In-kind and direct
matching funds shall not exceed 15 percent of the total matching
funds offered by a district.  A district may also include within its
matching funds any money spent on or after  February 25, 1999, that
would have qualified as matching funds but were not previously
claimed as matching funds.
   (h) A district desiring a reservation of funds shall apply to the
state board following the application guidelines established pursuant
to this section.  The state board shall approve or disapprove a
district application not later than 60 days after receipt.  Upon
approval of any district application, the state board shall
simultaneously approve a reservation of funding for that district to
administer.  Reserved funds shall be disbursed to the district so
that funding of a district-approved project is not impeded.
   (i) Notwithstanding any other provision of this chapter, districts
and the Mobile Source Air Pollution Reduction Review Committee shall
not use funds collected pursuant to Section 41081 or Chapter 7
(commencing with Section 44220), or pursuant to Section 9250.11 of
the Vehicle Code, as matching funds to fund a project with stationary
or portable engines, locomotives, or marine vessels.
   (j) Any funds reserved for a district pursuant to this section are
available to the district for a period of not more than two years
from the time of reservation.  Funds not expended by June 30 of the
second calendar year following the date of the reservation shall
revert back to the state board as of that June 30, and shall be
deposited in the Covered Vehicle Account established pursuant to
Section 44299.  The funds may then be redirected based on
applications to the fund.  Regardless of any reversion of funds back
to the state board, the district may continue to request other
reservations of funds for local administration.  Each reservation of
funds shall be accounted for separately, and unused funds from each
application shall revert back to the state board as specified in this
subdivision.
   (k) The state board shall specify a date each year when district
applications are due.  If the eligible applications received in any
year oversubscribe the available funds, the state board shall reserve
funds on an allocation basis, pursuant to subdivision (b) of Section
44299.1.  The state board may accept a district application after
the due date for a period of months specified by the state board.
Funds may be reserved in response to those applications, in
accordance with this chapter, out of funds remaining after the
original reservation of funds for the year.
   (1) Guidelines for a district application shall require
information from an applicant district to the extent necessary to
meet the requirements of this chapter, but shall otherwise minimize
the information required of a district.
   (m) A district application shall be reviewed by the state board
immediately upon receipt.  If the state board determines that an
application is incomplete, the applicant shall be notified within 10
working days with an explanation of what is missing from the
application.  A completed application fulfilling the criteria shall
be approved as soon as practicable, but not later than 60 working
days after receipt.
   (n) The commission, in consultation with the districts, shall
establish project approval criteria and guidelines for infrastructure
projects consistent with Section 44284 as soon as practicable, but
not later than February 15, 2000.  The commission shall make draft
criteria and guidelines available to the public 45 days before final
adoption, and shall hold at least one public meeting to consider
public comments before final adoption.
   (o) The commission, in consultation with the participating
districts, may propose revisions to the criteria and guidelines
established pursuant to subdivision (n) as necessary to improve the
ability of the program to achieve its goals.  A revision may be
proposed at any time, or may be proposed in response to a finding
made in the annual report on the program published by the state board
pursuant to Section 44295.  A proposed revision shall be made
available to the public 45 days before final adoption of the revision
and the commission shall hold at least one public meeting to
consider public comments before final adoption of the revision.

      Article 9.  Program Administration:  Application Evaluation and
Program Outreach

   44288.  (a) An application for a project grant shall be reviewed
by the administering district immediately upon receipt.  If the
administering district determines that an application is incomplete,
the applicant shall be notified within five working days with an
explanation of what is missing from the application.  The date and
time of receipt of each application determined to be complete shall
be recorded and the completed application shall be evaluated with
respect to the appropriate project selection criteria.  A district
shall make every effort to process an application and grant an award
rapidly and to coordinate project approval with any purchase or
installation timing constraint on an applicant.  Notwithstanding any
other provision of this chapter, the administering district may
determine that an application is not in good faith, not credible, or
not in compliance with this chapter and its objectives.
   (b) A participating district may request assistance from the state
board on an as needed basis to clarify project evaluation protocols
or to obtain information necessary to properly evaluate an
application.
   (c) An application for a grant for an infrastructure project shall
be reviewed by the commission immediately upon receipt.  If the
commission determines that an application is incomplete, the
applicant shall be notified within five working days with an
explanation of what is missing from the application.  The date and
time of receipt of each application determined to be complete shall
be recorded and the completed application shall be evaluated with
respect to the appropriate project selection criteria.  A complete
grant application fulfilling the project selection criteria shall be
approved as soon as practicable, but not later than 60 working days
after receipt.  Notwithstanding any other provision of this chapter,
the commission may determine that an application is not in good
faith, not credible, or not in compliance with this chapter and its
objectives.  The commission shall expedite the processing of an
application and shall grant an award as rapidly as possible.
   (d) Funds shall be awarded in conjunction with the execution of a
contract that obligates the state board or a participating district
to make the grant and obligates the grantee to take the actions
described in the grant application.  A contract shall incorporate the
recapturing provisions contained in subdivision (c) of Section
44291.
   44290.  The state board and participating districts shall
institute an outreach program to inform potential participants,
technology suppliers, vendors, engine and equipment dealers and
distributors, fleet owners, industry organizations and publications,
districts, and rail and port organizations of the availability of
grants, and of the requirements and objectives of the grant program.
The state board and district shall vigorously recruit grant
applications and publish examples of successful projects.  The
commission shall work closely with the state board and districts so
that infrastructure and technology development projects are closely
coordinated with overall program implementation.  Outreach efforts on
the part of the state board shall be coordinated with district
outreach efforts.

      Article 10.  Monitoring

   44291.  (a) The state board shall assist districts with developing
procedures to monitor whether the emission reductions projected in
successful grant applications are actually achieved.  Monitoring
procedures may include project audits, and may also include
requirements, as part of the contract between the state board or
districts and the grant recipients, that each grant recipient provide
information about the project on an annual basis.  Information
required from grant recipients should be minimized and the format for
reporting the information should be made simple and convenient.
   (b) As soon as practicable, the commission, in consultation with
the districts, shall publish procedures to monitor and audit
infrastructure projects.  These procedures shall ensure that the
amount of qualifying fuel dispensed annually is greater than or equal
to the amount upon which the grant award is based and that any
project qualifying for funding on the basis of public accessibility
or limited public accessibility is, in fact, providing that
accessibility.
   (c) The monitoring and auditing procedures shall be sufficient to
allow emission reductions generated to be fully credited to air
quality plans.  The monitoring procedures shall contain provisions
for recapturing grant awards in proportion to any loss of emission
reductions or underachievement in dispensing qualifying fuel compared
with the reductions and fuel dispensing projected in the grant
application.  Funds recaptured shall be deposited in the accounts
from which the funds were originally expended.  From time to time,
monitoring and auditing procedures shall be revised as appropriate to
enhance program effectiveness.
   (d) The state board shall monitor district programs to ensure that
participating districts conduct their programs consistent with the
criteria and guidelines established by the state board and the
commission pursuant to this chapter.  The monitoring procedures shall
contain provisions for recapture of funds not yet awarded to
approved projects if a district fails to show that they are
implementing a program consistent with the approved program.  If the
state board determines, pursuant to this subdivision, that moneys
from the fund allocated to a district should be recaptured, the state
board shall hold at least one public meeting to consider public
comments prior to recapturing the allocated funds.  The state board
shall make every effort to assist districts to implement programs in
an approved manner and shall only recapture allocated funds if these
efforts fail to address problems adequately.  Recaptured funds shall
be deposited in the Covered Vehicle Account.  The state board shall
not recapture funds already awarded to approved projects.

       Article 11.  Reporting

   44295.  (a) Not later than  March 1, 2001, and each  March 1
thereafter, through March 1, 2003, the state board in cooperation
with participating districts, and assisted by the commission with
regard to projects funded from the Infrastructure Demonstration
Program and the Advanced Technology Account, shall publish, and
notwithstanding Section 7550.5 of the Government Code, provide the
Legislature with, a program report.  The report shall describe each
covered vehicle project funded by the state board and by districts
that have received funds pursuant to this chapter, the amount granted
for the project, and the emission reductions obtained and the
cost-effectiveness of the project.  For projects funded from the
Advanced Technology Account, the report shall describe the technical
objectives and accomplishments of the project, and the progress of
the technology toward commercialization.  For projects funded from
the Infrastructure Demonstration Program, the report shall describe
whether the funding has been critical to supplying qualifying fuel
and supporting vehicles that reduce NOx emissions in California,
shall include a discussion of demonstration program
cost-effectiveness pursuant to subdivision (j) of Section 44284, and
shall make a finding as to the need for additional moneys to be
appropriated from the fund to the Infrastructure Demonstration
Program in order to improve the ability of the program to achieve its
goals.
   (b) The report shall detail funds received, funds granted, funds
reserved for grants  based on project approvals, district matching
funds and the sources of those funds, and any recommended transfer of
funds between accounts, and shall estimate future demand for grant
funds.
   (c) The report shall describe the overall effectiveness of the
program in delivering the emission reductions required by air quality
plans, including rate of progress plans and milestone and conformity
tests, as well as attainment and maintenance plans.  The report
shall evaluate the effectiveness of the program in soliciting and
evaluating project applications, providing awards in a timely manner,
and monitoring project implementation.  The report shall describe
any adjustments made to the project selection criteria and recommend
any further needed changes or adjustments to the grant program,
including changes in grant award criteria, administrative procedures,
or statutory provisions that would enhance the effectiveness and
efficiency of the grant program.
   (d) The state board shall request comments and hold public
meetings on each draft annual report to obtain public comments.  The
state board shall consider and respond to all significant comments
received in producing a final annual report.
   (e) A final annual report shall be published within 90 days from
the date of publication of each draft annual report.

      Article 12.  Disposition of Funds

   44296.  (a) All program funds shall be encumbered prior to January
1, 2002.  No grants shall be made by districts using money reserved
within the fund after that date, and no technology or infrastructure
project may be funded by the commission after that date.
   (b) On January 1, 2002, all unencumbered funds reserved for
districts shall revert back to the state board, and thereafter shall
be permanently allocated by the state board to districts in
proportion to the aggregate net disbursements that the participating
districts received during the life of the grant program, to be used
in accordance with the goals and objectives of the grant program and
to be granted by the districts in accordance with the procedures and
criteria in place at the termination of the grant program or as
subsequently modified by the districts as needed to better meet the
grant program objectives and protect human health and welfare.
   (c) Notwithstanding subdivision (b), the  advisory board may
recommend that unused funds be allocated to fund a continuing
statewide program similar to the program established as part of the
advisory board recommendations for a continuing program pursuant to
Section 44297.
   (d) Notwithstanding any provision in the Budget Act of 1999, funds
appropriated in that act to carry out the provisions of this act
shall only be available for encumbrance during the 1999-2000 fiscal
year.

      Article 13.  Continuing Program Recommendation

   44297.  (a) Not later than January 15, 2000, the state board, in
cooperation with participating districts, shall prepare a report on
the implementation, to date, of the diesel emissions incentives
program funded under the Budget Act of 1998.  Notwithstanding Section
7550.5 of the Government Code, the state board shall submit the
report to the Governor, the Legislature, and the advisory board.  The
report shall describe district efforts to implement the existing
program and provide an overview of the types of project applications
received.  The report shall assess the need for emission reductions
and incentive programs relative to the state implementation plan, and
the potential for emission reductions with continued funding, and
shall assess whether the program should be continued and funded in
the future.  The report shall also identify and inventory all
available state and local funds that may be utilized in carrying out
a continuing program including, but not necessarily limited to,
county district vehicle registration funding, air pollution penalties
from diesel and other air quality violations, funds from the High
Polluter Repair or Removal Account, created pursuant to subdivision
(a) of Section 44091, that are not expected to be utilized for
low-income repair assistance, and funds received from the federal
government pursuant to the Congestion Management and Air Quality
program.  The report shall also analyze the possible use of
mitigation fees, alternative settlements for compliance with state
air quality and environmental protection laws and regulations,
contributions by users of diesel equipment, and funds resulting from
the mitigation of adverse environmental impacts of transportation
projects.
   (b) The Carl Moyer Program Advisory Board is hereby created in
state government for purposes of assessing implementation of the
program and determining whether the program should continue to be
funded.  The advisory board shall have the following specified
responsibilities:
   (1) To review the report prepared by the state board pursuant to
subdivision (a) on program implementation.
   (2) To hold a public hearing on the need for a continuing program.

   (3) Notwithstanding Section 7550.5 of the Government Code, to
prepare a report and submit it to the Legislature and the Governor on
or before March 31, 2000.  The report may recommend a continuing
program, similar to the program established by this chapter, that
will make a significant contribution toward attaining air quality
standards in California.  The report shall recommend revenue sources
for funding financial incentives, together with any legislative or
budget action needed to implement a continuing program.
              (c) The advisory board shall consist of 13 members.
Four of the members shall be public members.  Two public members
shall be appointed by the Senate Committee on Rules, and two public
members shall be appointed by the Speaker of the Assembly.  The
Secretary for Environmental Protection shall appoint the following
nine members:
   (1) The executive officer of the state board.
   (2) One member of the commission.
   (3) One representative of the heavy-duty trucking industry.
   (4) One representative of the agricultural industry.
   (5) One representative of the construction industry.
   (6) One representative from the locomotive industry.
   (7) One representative from the marine industry.
   (8) One representative of a regional transportation agency.
   (9) One member of a public interest environmental organization.
   (d) The executive officer of the state board shall serve as the
chairperson of the advisory committee
   (e) The advisory board may appoint ex officio officers.
   (f) The advisory board may request assistance from the state board
and the commission for administrative services and staff support,
and these agencies may provide these services, to the extent they
determine it is feasible, within existing budgetary resources.
   (g) This article shall remain in effect only until April 1, 2000,
and as of that date is repealed, unless a later enacted statute, that
is enacted on or before April 1, 2000, deletes or extends that date.


      Article 14.  Funds

   44299.  (a) The Carl Moyer Memorial Air Quality Standards
Attainment Trust Fund is hereby created in the State Treasury.  The
Controller shall transfer any unencumbered funds appropriated to the
commission or the state board for the diesel emissions reduction
incentive program by Items 3360-001-0314 and 3900-001-0001 of Section
2.00 of the Budget Act of 1998 (Ch.  324, Stats. 1998), and Items
3360-001-0314, 3360-001-0001, 3360-001-0465, 3900-001-0001, and
3900-001-0115 of Section 2.00 of the Budget Act of 1999 (Ch. 50,
Stats. 1999), to the trust fund.  The money in the trust fund shall
be available upon appropriation by the Legislature to carry out the
purposes of this chapter.
   (b) To ensure that emission reductions are obtained as needed from
air pollution sources, the following accounts are hereby created in
the trust fund:
   (1) The Covered Vehicle Account.
   (2) The Advanced Technology Account.
   (c) Notwithstanding Sections 16475, 16475.1, and 16480.6 of the
Government Code, all of the interest earned on money in the trust
fund shall be deposited in the trust fund.
   44299.1.  (a) To ensure that emission reductions are obtained as
needed from pollution sources, any money deposited in or appropriated
to the fund shall be segregated and administered as follows:
   (1) Ten percent, not to exceed two million dollars ($2,000,000),
shall be allocated to the Infrastructure Demonstration Project to be
used pursuant to Section 44284.
   (2) Ten percent shall be deposited in the Advanced Technology
Account to be used to support research, development, demonstration,
and commercialization of advanced low-emission technologies for
covered sources that show promise of contributing to the goals of the
program.
   (3) Not more than 2 percent of the moneys in the fund shall be
allocated to program support and outreach costs incurred by the state
board and the commission directly associated with implementing the
program pursuant to this chapter.  These funds shall be allocated to
the state board and the commission in proportion to total program
funds administered by the state board and the commission.
   (4) Not more than 2 percent of the moneys in the fund shall be
allocated to direct program outreach activities.  The state board may
use these funds for program outreach contracts or may allocate
outreach funds to participating air districts in proportion to each
district's allocation from the Covered Vehicle Account.  The state
board shall report on the use of outreach funds in their reports to
the Legislature pursuant to Section 44295.
   (5) The balance shall be  deposited in the Covered Vehicle Account
to be expended to offset added costs of new very low or
zero-emission vehicle technologies, and emission reducing repowers,
retrofits, and add-on equipment for covered vehicles and engines.
   (b) Funds in the Covered Vehicle Account shall be allocated to a
district that submits an eligible application to the state board
pursuant to Section 44287.  The state board shall determine the
maximum amount of annual funding from the Covered Vehicle Account
that each district may receive.  This determination shall be based on
the population in each district as well as the relative importance
of obtaining NOx reductions in each district, specifically through
the program.
  SEC. 3.  (a) It is the intent of the Legislature that funds
appropriated to the State Energy Resources Conservation and
Development Commission for the Diesel Emissions Incentive Program
pursuant to Item 3360-001-0001 of Section 2.00 of the Budget Act of
1999 are to be encumbered for the support of the Carl Moyer Memorial
Air Quality Standards Attainment Program as follows:
   (1) Two million dollars ($2,000,000) for Advanced Technology
Development grants awarded pursuant to Article 7 (commencing with
Section 44285) of Chapter 9 of Part 5 of Division 26 of the Health
and Safety Code.
   (2) Two million dollars ($2,000,000) for the Infrastructure
Demonstration Program described in Article 6 (commencing with Section
44284) of Chapter 9 of Part 5 of Division 26 of the Health and
Safety Code.
   (b) Funds specified in subdivision (a), and any other funds
appropriated during the 1999-2000 fiscal year to the State Energy
Resources Conservation and Development Commission for support of the
Carl Moyer Memorial Air Quality Standards Attainment Program, may be
used for any of the following purposes:
   (1) Grants.
   (2) Loans.
   (3) Contracts.
   (4) Technical support.
   (c) Any unencumbered funds appropriated to the State Air Resources
Board for the diesel emissions reduction incentive program by the
Budget Act of 1998 and the Budget Act of 1999, other than those funds
listed in the items in subdivision (a) of Section 44299, shall be
transferred by the Controller to the Carl Moyer Memorial Air Quality
Standards Attainment Trust Fund for the support of the Carl Moyer Air
Quality Standards Attainment Program.
  SEC. 4.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to begin the implementation of a program to achieve
reductions in air pollution emissions that adversely affect public
health and the environment, and that are required to be achieved by
the State Implementation Plan pursuant to federal law as soon as
possible, it is necessary that this act take effect immediately.
